US Stocks Dip as Investors Brace for Tariff Shifts and Await Powell's Testimony

US stocks retreated on Tuesday as investors anticipated further tariff policy adjustments from President Donald Trump. Attention also shifted to inflation, with Federal Chair Jerome Powell set to testify before Congress.

Within minutes of the opening bell, the Dow Jones Industrial Average (DJI) and S&P 500 (GSPC) had both declined by around 0.3%. The Nasdaq Composite (IXIC), heavily reliant on tech, fell by approximately 0.5% after gaining ground the previous day.

Caution pervaded markets as investors awaited Trump's announcement on wide-ranging tariffs, expected midweek. The President's imposition of 25% tariffs on steel and aluminum imports from March 12 has heightened pressure on major trading partners Canada and Mexico.

Investors struggled to gauge the extent to which Trump's tariff threats would materialize, expressing concern over potential impacts on corporate earnings, the global economy, and inflation. Gold (GC=F) initially set a record high as investors sought safe haven, but later retreated on Tuesday.

Amid these concerns, markets scrutinized Powell's two-day congressional testimony, commencing in the Senate on Tuesday, for indications of the Fed's stance on tariffs and inflationary pressures. Meanwhile, the release of the January Consumer Price Index readings was imminent, along with wholesale inflation data on Thursday, as inflation remained persistent.

On the earnings front, Coca-Cola (KO) shares surged after surpassing revenue and profit expectations for the fourth quarter, with soda demand remaining robust despite price increases. Shopify (SHOP) stock rebounded from pre-market losses after the e-commerce company reported a conservative first-quarter profit forecast but better-than-anticipated holiday sales.

Elon Musk's bid to acquire OpenAI drew attention from Wall Street, amid ongoing concerns about artificial intelligence spending in the "Magnificent Seven" tech giants. The AI nonprofit's CEO rejected Musk's unsolicited offer of $97.4 billion, which significantly undervalued the company.

Elsewhere in tech, Meta (META) initiated layoffs as part of CEO Mark Zuckerberg's plan to reduce the workforce and prioritize hiring AI talent.